Fertilizers

Urea prices strengthened between February and March, when they were quoted at more than 50 percent above the prices at the same time last year. However, lower gas prices in the United States and consequently the restart of urea production there, as well as the resumption of exports from Venezuela, may influence prices in the near future. Freight costs have increased because of war risk premiums, but this might be partially offset by reduction in freight rates due to lower bunker costs. In Europe the season for purchasing urea is ending. Venezuela and Egypt are supplying France. In Asia demand is weak. In India the department of fertilizer approved a total of local production of about 9.5 million tonnes for the Kharif season. The department has been requested to approve permits for importing 100 000 tonnes as local production may not meet demand. In China prices of locally produced urea have increased and export tonnes are limited. In Viet Nam requirements for the coming season in the South are more or less covered. Latin America is not expected back in the market for the next few weeks as most purchases have been fulfilled. The Arab Gulf is supplying Australia, South East Asia and the United States. Kuwait has shut down its ammonia and urea plant.

Ammonia prices have increased between 12 and 30 percent over the past two months. The Black Sea availability is tight and prices remained firm. In the Arab Gulf inventories are at a minimum level, but if production continues, prices may weaken. Demand from the United States is expected to decrease as the United States have restarted domestic production in response to high ammonium prices and falling gas prices.

Prices for ammonium sulphate increased between 15 and 19 percent in the last two months. March quotations were about 15 percent higher than a year ago in eastern Europe and 27 percent lower in western Europe. There is demand for ammonium sulphate from Turkey and Egypt, while the Mediterranean is expected to purchase about 250 000 tonnes. The Baltic Sea is supplying Mexico.

Diammonium phosphate (DAP) prices increased during the last two months between 8 to almost 20 percent. March quotations were between 16 percent to 22 percent higher than during the same period last year. Prices are expected to strengthen as the war with Iraq may give rise to DAP shipping problems and potential supply problems of ammonia to DAP producers. North Africa is supplying western Europe, Viet Nam and Ethiopia. China is still importing but this is foreseen to decrease by April. The government of India has decreased the maximum retail price to its previous level and increased subsidies, which are higher for domestically produced DAP so that the incentive for imports fell. India is reducing its DAP production because of increasing ammonia prices and supply problems. Domestic demand is strong. The spring domestic demand in the United States is starting. Europe is negotiating prices with North African suppliers. Quite a few Latin American countries have entered the market, but credit problems in Mexico might lead to lower DAP imports throughout the year. CIS producers are reportedly supplying Brazil and Viet Nam.

Prices of triple superphosphate (TSP) remained stable in the first quarter of 2003, and were about 6 percent above those of last year. TSP is selling about US$40 per tonne less than DAP and is therefore in demand. The United States supplied Brazil. Bangladesh is possibly entering the market, but waits for lower prices. Sri Lanka is tendering for large amounts. North Africa and Bulgaria are supplying Europe.

Average spot prices of muriate of potash (MOP) remained unchanged in February and March. Prices were about 2 percent down from a year ago in eastern Europe, and remained at the same level in western Europe and Vancouver. Prices are expected to remain firm. India, Indonesia and Pakistan are tendering for large amounts. Jordan is supplying Thailand. The Republic of Korea is purchasing 20 000 tonnes from Canada. In China prices fell due to competition between domestic suppliers. The origin of the MOP sold in China is the CIS and Canada. Jordan is shipping MOP to European markets. Most South East Asian countries have entered the market and consequently prices will remain stable. Germany is supplying the United States and Brazil.

Average Fertilizer Spot Prices (bulk, f.o.b.)

February

March

March

Change from

2003

2003

2002

last year 1/

(US$/tonne)

(percentage)

Urea

eastern Europe

132-134

138-142

89-90

56.4

Near East

142-147

155-163

103-105

52.9

Ammonium Sulphate

eastern Europe

43-45

47-58

44-47

15.4

western Europe

38-40

43-47

60-64

-27.4

Diammonium Phosphate

Jordan

168-170

186-193

160-166

16.3

North Africa

163-167

178-181

148-156

18.1

U.S. Gulf

170-172

189-193

154-157

22.8

Triple Superphosphate

North Africa

131-133

131-133

121-126

6.8

U.S. Gulf

135-137

142-144

135-136

5.5

Muriate of Potash

eastern Europe

89-104

89-104

92-106

-2.5

Vancouver

110-123

110-123

107-126

0.0

western Europe

105-115

105-115

105-115

0.0

Source: Compiled from Fertilizer Week and Fertilizer Market Bulletin. 1/ From mid-point of given ranges.